Industrial zones prove their worth

Update:
February, 18/2012 - 10:16

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Industrial and export processing zones in HCM City. The zones across the country contributed 32 per cent to industrial production value, 25 per cent to export turnover, paying $5.96 billion to the State budget last year. — VNA/VNS Photo Ngoc Ha

Minister Bui Quang Vinh made the statement at a conference in Ha Noi yesterday held to review the construction and development of IZs, EPZs and EZs over the past two decades and to find solutions for their further development.

"Since the establishment of Tan Thuan EPZ in 1991, the country is now home to 267 IZs and EPZs which are responsible for around 40 per cent of the total foreign direct investment (FDI) registered in Viet Nam, over 30 per cent and 20 per cent of the country's total industrial production and export value, respectively, and provide jobs to more than 1.6 million labourers," he said.

Figures from the ministry reveal that the zones cover an area of around 76,000ha, of which 46,000ha has been rented.

By the end of last year, the zones had attracted 4,113 foreign-invested projects with US$59.6 billion in registered capital. FDI disbursement in the zones was $27 billion, reaching 45 per cent of the total registered capital during the past 20 years.

FDI flows in the zones have also accounted for 35 to 40 per cent of the country's annually registered capital while FDI for industrial production has made up 80 per cent of the total investment in Viet Nam's industry.

Vinh also said the zones had contributed 32 per cent to industrial production value and 25 per cent to export turnover, paying $5.96 billion to the State budget.

Last year alone, $6.7 billion in FDI was registered in the zones while $7.28 billion was dispersed.

"However, development of the IZs, EPZs and EZs has revealed shortcomings in planning, policies and mechanisms, low technology levels and difficulties in land clearance and infrastructure development," said Nguyen Van Trung, the deputy minister.

Trung added that environmental shortcomings remained in IZs despite improvements. Dozens of IZ-based enterprises had not seriously abided by environmental protection laws while State agencies had collaborated in environmental monitoring and supervision had been lax, he said.

Participants also discussed other shortcomings.

Chairman of HCM City People's Committee Le Hoang Quan said the city and neighbouring provinces such as Dong Nai and Binh Duong had several hundred IZs and EPZs.

"However, most of them were not linked to the region's economic situation or the network of universities and colleges, making their support industries weak," Quan said.

Do Thu Hang, chairwoman of the Development of Bien Hoa Industrial Zones Corporation's (SONADEZI) management board, said tax and preferential policies in some IZs had not been as attractive as those outside, meaning investors tended to rent land outside the zones to enjoy lower prices.

"For example, IZs in Dong Nai Province attracted 41 FDI projects in 2008 but only six the following year," she added.

Chairwoman of the Viet Nam Investment and Development Group Nguyen Thi Nguyet Huong said several localities had applied high rent prices, boosting them beyond investor thresholds.

In addition, bank loan interest rates for investment in the zones was high because they were considered real estate loans, she said.

Speaking at the conference, Deputy Prime Minister Hoang Trung Hai said development of the zones had not reached the potential offered by the land or met the established targets.

Hai urged the ministry and localities to focus on three key factors including infrastructure, labour training and legal mechanisms to increase the occupation rate in the zones to 70 per cent by 2015 for an industrial production value contribution of 50 per cent.

The deputy PM asked the ministry to establish a central steering committee on the issue to resolve shortcomings and difficulties, especially in implementing big projects.

He also asked for the development of specific solutions to ensure association among ministries, agencies and localities concurrent with acceleration of administrative reforms.

He said the Government would review the zones' planning in the near future and cease to approve new projects.

The Government would strictly forbid using rice cultivating land to build IZs. — VNS